All eyes will be on CK Hutchison this Thursday as the Hong Kong conglomerate prepares to release its results, with investors keenly awaiting any updates on the proposed $22.8 billion sale of its ports business to a BlackRock-led consortium.
At 0900 GMT, the ports-to-telecoms group is scheduled to present its interim results, Reuters said in a report.
This will be the first chance for analysts to question management regarding the plan to sell the ports business, an initiative that was announced in March.
In an unusual move, CK Hutchison did not provide briefings to analysts or the media regarding its 2024 earnings.
This departure from their standard procedure occurred in March, following the public announcement of their intention to sell the business, which notably includes two ports situated along the strategic Panama Canal.
China criticism
CK Hutchison has encountered strong criticism from China following the announcement of its plan to sell 43 ports across 23 countries. The buyers are a group led by BlackRock and MSC, a shipping firm owned by Italian billionaire Gianluigi Aponte’s family.
On July 28, the conglomerate announced that it was in discussions with the consortium bidding for its ports business. These talks aim to introduce a major Chinese strategic investor to the bid, following the conclusion of their exclusive negotiation period.
It would allow as much time as needed to secure regulatory approval in relevant jurisdictions, as changes would be necessary to achieve that.
Sources indicate that COSCO, a prominent global marine transportation company, was the investor in question, according to the Reuters report. COSCO was reportedly seeking a larger stake, while other consortium members preferred to maintain it as a minority holding.
Although COSCO’s potential stake remains unconfirmed, sources and experts suggest that the inclusion of a Chinese investor would address China’s national security concerns and secure its approval.
Panama Canal importance
The strategic importance of the Panama Canal to the US has long been a subject of geopolitical debate and national security concerns.
US President Donald Trump notably vocalised his demand for the divestment of Chinese ownership interests within the canal, underscoring the deep-seated anxieties surrounding foreign control over this vital global trade artery.
This concern is amplified by the sheer volume of commerce that traverses the canal. An astonishing more than 40% of all US container traffic, representing an immense annual value of approximately $270 billion, relies on the Panama Canal for transit.
This figure highlights the canal’s indispensable role in facilitating American trade, supply chains, and economic prosperity. Any disruption or foreign influence over its operations could have profound and far-reaching implications for the US economy.
Financial outlook
CK Hutchison’s shares declined by 0.2% on Thursday, underperforming the Hang Seng Index, which experienced a 0.1% decrease, as the company awaited its results.
Last month, UBS projected a 6% increase in underlying profit for the first half of the year.
This growth is attributed to the expansion of their ports and retail businesses, alongside a weakening dollar, which together are expected to counteract the negative effects of oil prices.
However, the conglomerate’s net profit may be adversely affected by one-off losses, such as those stemming from the finalization of the 3UK merger.
Last month, CK Hutchison received an “overweight” rating from Morgan Stanley. This rating was based on the company’s attractive valuation, strong balance sheet, and potential for strategic transactions.
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